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Everything You Need to Know About the Recovery Rebate Credit

Everything You Need to Know About the Recovery Rebate Credit

Good news! If you were eligible for the Economic Impact Payments but didn’t receive the complete amount of one or both, you can claim the new Recovery Rebate Credit when you file your 2020 taxes. This new credit will enable you to receive the full amount of the stimulus that you are eligible for.

Read on to learn about the Recovery Rebate Credit and how you can file your 2020 taxes to receive the Economic Impact Payment that you deserve!

The Recovery Rebate Credit

The CARES (Coronavirus Aid, Relief, and Economic Security) Act and the Tax Relief Act have authorized a 2020 tax credit known as the Recovery Rebate Credit. Those who accurately claim this credit will either have the amount of taxes that they owe decreased or the amount they get back on their tax refund increased.

In 2020 and early 2021, two rounds of the Recovery Rebate Credit were sent out to many eligible recipients as an advanced payment, known as the Economic Impact Payment.  These eligible recipients received $1,200, or $2,400 if married, filing jointly, and $500 per child during the first payment, and $600, or $1,200 if married, filing jointly, plus $600 per child, during the second.

However, some eligible people did not receive either the first, second, or both payments, and will need to enter information on their 2020 form 1040 or 1040-SR.

Recovery Rebate Credit Eligibility

Those who did not receive the Economic Impact Payment during either round may wonder whether or not they are eligible. To make sure that you are able to claim the Recovery Rebate, complete the Recovery Rebate Credit Worksheet in form 1040 or 1040-SR instructions.  

Basic eligibility requires recipients to be a US citizen or a US resident alien in 2020. They must not be claimed as a dependent on anyone’s taxes in 2020, and they must have a valid Social Security number. Anyone eligible for the Recovery Rebate Credit must file a tax return, including those who are not normally required to file.

You should have received IRS notice 1444 in regards to the first payment, and notice 1444-B for the second. Use these notices when following the instructions on the Recovery Rebate Credit Worksheet. If you are eligible for the credit, you will be able to use the supplied information in order to discover the amount that you should receive for the stimulus. You will include this amount on the worksheet or during your tax preparation in order to claim the accurate credit amount.

If you are married, filing jointly, or if you are filing as a widower, and your adjusted gross income is more than $150,000, you will not be eligible for the credit. Those who are filing as a head of household will not be eligible if they make over $112,500 in adjusted gross income. For those who file using another status, eligibility ends at $75,000.

File With ATC Tax Professionals

Your tax service will lead you through accurate filing to ensure you receive everything you are eligible for. If you have not received the first Economic Impact Payment, ATC Tax Professionals can help.

We will work with you to help you determine eligibility and re-capture EIP 1 and EIP 2. It’s been a rough road and you deserve every penny to help you get, or stay, on track.



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